Every investor, sadly, has to be a Fed watcher given that US asset markets are supported, if not levitated, by quantitative easing. Sadly because, and Ben Bernanke himself might agree with this, we could all probably find more productive ways to spend our time. Sad, too, because the US Federal Reserve’s reach actually seems to be diminishing amid doubts about how well QE is working. Perhaps never before has the market been this dependent on the Fed and perhaps never before has there been as much doubt over its eventual success. That makes the latest Fed policy meeting minutes, released last week, the markets’ most under-sung story of the week. The minutes, which hinted at further accommodation in 2013, showed that “a number” of Fed officials believe the US central bank will have to buy additional assets when its current program, Operation Twist, wraps up at the end of the year. This is counter-balanced, somewhat, by “several” others, including Jeffrey Lacker of the Richmond Fed, who doubt this is needed. Put your money with the easers, led most likely by Chairman Bernanke. Operation Twist, under which the Fed sells $ 45 billion a month in short-term paper and uses the funds to buy longer dated debt, is intended to drive down longer-term interest rates. It is also a support for equities; when investors see pitiful government debt rates, they are likely to throw up their hands and buy dividend stocks and other risk assets. What comes after Operation Twist may be, if anything, slightly better for risk assets. Operation Twist keeps the size of the Fed’s portfolio constant, as they sell a dollar of short-term debt for every dollar of Treasuries they buy. After Twist expires the Fed may well simply print money and buy Treasuries, not only driving down yields but also creating more money which can support equities. With the Fed already spending $ 40 billion a month to buy mortgage bonds, we could see about $ 85 billion of new money being pumped into the markets every month in 2013. What would happen if the Fed allowed Twist to end? While interest rates might not spike higher, they would certainly drift, and risk-asset investors would then face a poor outlook for profits and the risk of a fiscal-cliff-induced recession. The market would tumble. Since the Fed has tied its policy more explicitly to unemployment, it is not going to allow that to happen, so QE4, or, if you like, QE4ever here we come. The inevitability of continued Fed easing is supported by the discussion, in the minutes and recent speeches, of so-called quantitative thresholds. Under such a threshold, the Fed would commit itself to buying so many Treasuries until a specific level of unemployment or nominal GDP growth were met. That’s still controversial, both inside and outside the central bank, but the very discussion is a fat signal that we won’t see any passive tightening when Twist comes to an end. The impact of additional QE is much harder to determine. Thus far QE has shown mixed results. It’s been more a supportive therapy than a cure, at least in terms of the economy. And surely the experience in Japan, where QE has a long track record and where they’ve gone as far as buying equities, offers no assurances of success. In market terms, however, QE has likely been quite important. It has supported equities, particularly those paying reasonable dividends, as well as other risk assets. It is hard, though, to get very excited by the prospect of more QE-induced gains. Equities, even with support, face too many other hurdles: The fiscal cliff, earnings, the euro zone and, of course, the possibility that Fed support fails to work. If the US, even with massive QE, were to head into another steep recession investors would quite rightly lose confidence in the central bank. It is more a case of downside if they don’t than upside if they do. The counterbalance: An utter lack of attractive alternatives to risky assets. Treasuries surely have much risk and little reward and while corporate debt is well supported by clean balance sheets, the corporations must sell to governments and households with real balance-sheet problems. The expiration next year of unlimited FDIC account insurance may actually make things worse from a fixed income investor’s point of view, driving huge amounts of cash out of bank deposits and into government debt. This, in combination with proposed new money market rules which will make them also more likely to hold government debt, might actually lead to negative short-term interest rates in the US. So there you may have it: pay the US to lend its money or take your chances with the Fed and equities.

— James Saft is a Reuters columnist. The opinions expressed are his own.

What's happening around Saudi Arabia

JEDDAH: A Saudi citizen was killed in shelling fired across the border from Yemen into the southwest of Saudi Arabia on Sunday, local media reported.A shell fell on a house around dawn in Najran province, civil defense department spokesman Ali bin Om...

JEDDAH: Female voters in Al-Ahsa have urged the authorities handling the municipal elections to drop the condition of presenting the national identity card while enrolling themselves in the voters’ list. Some women in Madinah too have appealed for mo...

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JEDDAH: The Makkah governorate has announced four new road projects linking Makkah and Jeddah. The new roads will facilitate smoother and faster travel between the cities.An estimated 35 million people will benefit from the projects, which will inclu...

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JEDDAH: Information and Culture Minister Adel Al-Toraifi has approved the appointment of Khalid Bo-Ali as editor in chief of the Eastern Province-based Alsharq Arabic newspaper. He was nominated for the post by the board of directors of the newspaper...

JEDDAH: Jamil Farsi, head of the Gold and Jewelry Committee at the Jeddah Chamber of Commerce and Industry (JCCI), says he expects 3,000 job opportunities to be created for Saudi women in the jewelry design and gold sector across the Kingdom, with ab...

JEDDAH: More than 50 visually challenged people successfully performed Umrah with the help of the Ebsar Foundation for the Visually Impaired and the Ambassadors of Volunteers organization under their program “Umrah for the visually impaired,” which w...

JEDDAH: Although the Ministry of Labor is opening its doors to receive complaints from private sector employees, many Saudi females employed in cosmetic and perfume shops in Madinah are not making complaints about being overworked due to fear of losi...

JEDDAH: Health Minister Dr. Khaled Al-Falih is set to increase the number of beds in all private sector hospitals, as per new implementation regulations adopted this year.The move will help address the problem of delays in public sector projects, as...